Then came word that Google and Dell were working on a deal to put the forthcoming Chrome OS on Dell PCs.

Since the reviews of Web-based Office are tepid at best, many industry watchers have interpreted all of this as advantage Google. Even so, its important to remember that Office is, according to IDC, entrenched in up to 97% of all businesses. Meanwhile, Microsoft reports that it sells more than 600,000 Windows 7 licenses each and every day. This translates into 7 copies sold every second of every day since Windows 7 launched. Most of those copies of Windows 7 will be running some version of Office.

Nevertheless, as the enterprise moves slowly but steadily toward cloud computing, Google is the tech behemoth with cloud pedigree, while Microsoft is playing catch-up. Sure, Microsoft has been talking about the cloud for years, much in the way that it touted Web tablets a decade ago. But what happened with tablets? Microsoft flopped and had to grit its teeth as the iPad stole its thunder.

Could the same scenario play out in the cloud?

Microsoft on Every Desktop, but so Is Google

When I spoke to Michael E. Dortch, Director of Research for FOCUS, an IT market research firm, he cautioned that Microsofts track record makes it a pretty safe bet to be a major player in the cloud.

With many past innovations, such as the browser, Microsoft was late to market, but ended up dominating. The big difference this time around, though, is the level of the competition. When Microsoft wrestled the browser away from Netscape, it prevailed against an upstart with no proven revenue model.

In contrast, Google achieved a net income of $6.5 billion for FY 2009.

Remember, though, Microsoft is on each and every desktop, Dortch said. When I pointed out that Google is too, Dortch noted a key distinction: Everyone uses Google, but few in IT actually buy from them. Google is as unknown an entity to IT, as a business partner, as Microsoft is as a cloud provider.

Whos Making the Cloud Computing Shift?

Several marquee customers have made the switch to Google Apps, including the City of Los Angeles, biotech firm Genentech and consumer electronics giant Motorola.

In fact, Google claims more than 25 million business users for Google Apps, all of whom have adopted Google Apps in the last three years. Thats some serious momentum.

While some organizations have done forklift migrations to Google, what is more common is for companies to get their feet wet with Google without abandoning Microsoft altogether.

Lincoln Property Company, one of the nations largest property development and management firms, actually converted to Google not from Microsoft but from Novell GroupWise. As they were investigating alternatives to GroupWise, the professional services firm they were working with, Cloud Sherpas, recommended Google Apps. Cloud Sherpas has helped almost 2,000 organizations migrate to Google Apps and away from Exchange, GroupWise and Lotus Notes.

Our email archive was getting so big that it was difficult to back up, said Jay Kenney, CIO for Lincoln Property. Our SAN was outdated, and it came down to buying new hardware and most likely embarking on a virtualization effort, which would require significant upfront spending. Or we could move to the cloud.

Lincoln Property chose the cloud. By outsourcing email, weve freed several servers, avoided the headache of virtualizing our infrastructure and saved a lot of money in the process, Kenney said.

Now, they use Google Postini for email archives, while also taking advantage of Gmail, Calendar and Docs for collaboration. In fact, many organizations are adopting Google for one thing and one thing only: collaboration.

Lincoln Property still relies on Office, but in order to make Office collaborative, they turn to Google. While Microsoft is beefing up the collaboration features in Office, not everyone is ready to upgrade  and they dont have to. Google already delivers cheap collaboration without having to abandon legacy Office suites.

In these days of dwindling IT budgets, Rajen Sheth, group product manager for Google Apps, points to another reason to abandon expensive on-premise apps.

IT is becoming more and more difficult to maintain, Sheth said. Businesses spend so much time and money on management and maintenance that they lose sight of their core businesses.